Using Rewards Credit Cards to Get More from Your Spending

Credit cards with rewards are especially designed to give customers incentives for their spending. If you are a reward cardholder or plan to apply for one, you should know the right strategy to make sure that you will benefit from your credit card while avoiding bad debt at the same time:

Don't carry a balance. The number one rule that reward credit cardholders must remember is to avoid carrying a balance on their account. Since reward cards typically carry higher interest rates than non-reward cards, you could end up paying more on interest charges if you fail to pay off your full balance.

Understand the offer. Some advertise more rewards per dollar spent but before you sign up for a card, you should read the fine print to understand what the real offer is. Some deals are subject to special conditions.

For example, a card may offer "up to" 5% cash back for every dollar spent. The term "up to" may be followed with an asterisk which means it is subject to the issuer's condition. Upon checking the fine print, you may discover that you will only be able to get the maximum value of cash back or rebate on special purchases or purchases made at affiliate merchants. Yet, if you don't shop from those merchants, you may not get the chance to get the full reward at all.

Don't pay high fees. If your reward credit card carries an expensive annual fee and penalty fees, you could end up paying more on maintenance charges than the rewards you earn. If you must spend at least $300 each year on extra fees and what you get is just $5 gift card, do you think it is still worth keeping?

Choose a Frequent Flyer card only if you're a frequent flyer. It offer its cardholders the chance to fly for free but it's not as easy as it sounds. Since points are converted into miles, you might be required to collect 10,000 points before you can get a free flight.

Thus, if you're not much of a spender and if you don't use your credit card on large purchases such as airline ticket purchases and other travel-related expenses, it could be very difficult for you to get rewarded. If you're not a traveller, consider a card with cash-back or gas rewards instead.

Plan your purchases. Before charging anything on your credit card, be sure you will be able to pay your full balance on time. Consider charging monthly utility bills to your reward card so you can regularly collect points without necessarily purchasing items. However, if you plan to do this strategy, use your cash to pay your charges immediately to avoid incurring interest rate or late fees.

Check your rewards points. Access your account regularly and see to it that you are earning the correct number of points for your spending. Furthermore, be sure that you are not being billed for purchases that you did not make.